Something broadly based, including taxing things like corporate profits. I've never quite worked out what good the pretend corporates based here are doing us.

Regardless, basing your tax take on property building and transactions is not a good plan, was not a good plan.

The current plan is to cut spending and increase taxes and service charges, because a deflationary spiral will increase the tax take or something. <shrug> Fucked if I know how that's meant to work, but it makes the Commission, the ECB and the financial markets sort of happy.

Well, we'll end up paying 50 Billion plus for toxic bank loans (on property) and a similar amount to recapitalise banks busted by property loans. That adds up to c. 60% of GDP's worth of public money spent on covering the losses of private property speculators.

So the first problem is ideological: why are taxpayers being made liable for private losses - and thus also removing all semblance of moral hazard.

The second problem is also ideological - we tax income and spending, but not property and speculation - so guess where all the money goes, and why property bubbles ultimately become unsustainable - they aren't related to incomes (and ability to pay rents/mortgages) or real economic value, make Ireland uncompetitive, and unbalance the economy to the point where construction industry becomes 30% of GDP.

The third problem is also ideological. We didn't believe in sufficiently regulating "the markets" when the markets where preciously gaming a system of trust on which we all depended.

The deficit in 2009 was largely caused by a huge hole in our tax take created by the property bust. The Government had become very dependent on stamp duties and capital gains taxes levied on property transactions and when that market cratered, so did the tax take. In addition the "feel good factor" previously created by rising house values (and shares) and a buoyant jobs market suddenly disappeared and consumer confidence and expenditure dived - also effecting the more general tax take.

Now, of course, all these factors are compounded by the Government having to introduce swinging capital and ongoing expenditure reductions to try and rein in the deficit.

Basically the whole edifice had been built on the assumption of ever rising property prices with, at most, a "soft landing" or mild correction every now and then. As you know, the "market is always right".

I don't think budget deficits equivalent to 12%+ of GDP are sustainable except in an emergency and for a relatively short period. Not only do you have the increased servicing cost, but the interest rates demanded by sovereign debt markets become unsustainable - as in the case of Greece.

It is, of course, arguable that the Government should have gone down the Greek route and kept incurring that level of borrowing in the hope that a quicker recovery in the economy and tax take would have enabled us to reduce the deficit at less social cost in due course.

However my point is that we should never have nationalised private debts in the first place. We need a functioning banking system, but that need did not have to be fulfilled through bailing out existing bondholders in exiting banks. The banks, especially Anglo - should have been allowed go bust on a Friday evening and reconstituted as new entities the following Monday.

As David McWilliams has argued, banks go bust all the time, debts are restructured all the time, and there is no reason why such defaults should have had any longer term effect on Ireland's Sovereign debt rating.

Indeed, as we started out from a relatively low level of National debt (c. 28% of GDP at its lowest) 12% budget deficits would have been sustainable for a few years if we hadn't invented NAMA or bailed out the private banks.

No, but fixing the budget deficit requires fixing the tax system, not cutting our already low levels of public spending as prescribed by the Dublin Consensus. It's not obvious that the cuts they've instituted will make more than a very small difference to the deficit (according to ESRI figures interpreted by the progressiveeconomy people) because of the knock-on effects on tax income and the general effect on the economy of speeding deflation. It's not about deficit reduction, it's about looking good to the markets.

I don't think budget deficits equivalent to 12%+ of GDP are sustainable except in an emergency and for a relatively short period. Not only do you have the increased servicing cost, but the interest rates demanded by sovereign debt markets become unsustainable - as in the case of Greece.

Frank this is objectively true in our case in the Eurogroup. But for a state with its own currency such deficits can be run for "long" periods without defaulting. First of all you have to continuously depreciate your currency so that rolling over debt doesn't kill you. Secondly, you set up some sweet rates on government bonds to seduce local investors, keep the debt in borders. Watch the US closely for something along these lines.

There's an obviously problem, at some point the folk may become nervous about an ever depreciating currency. After that it's game over.

A state with its own currency doesn't even need to issue debt. Running a large unfunded deficit probably has some drawbacks, but I suspect they are similar in nature to the unconstrained money creation by the financial sector that prevailed before the crisis.